The Internal Revenue Service just made life a lot easier for many small-business owners by simplifying the rules for the home office deduction.

Under the new rules, which go into effect for the 2013 tax year, taxpayers can choose a simpler method for determining how much money they can deduct from their income for using part of their home for business purposes. Instead of filling out a 43-line form that calls for complex calculations such as depreciation, taxpayers can multiply the square footage they use for business purposes by $5, up to a maximum deduction of $1,500.

This simplified option of determining the home office deduction will save small-business owners an estimated 1.6 million hours of paperwork hassles, according to the IRS.

‘”This is a common-sense rule to provide taxpayers an easier way to calculate and claim the home office deduction,” said acting IRS Commissioner Steven Miller.

It may be common sense, but it took the IRS a long time to get around to offering this option to home-based businesses. Groups representing small businesses and the U.S. Small Business Administration’s Office of Advocacy have been urging the IRS to make this change for years.

“This is terrific news for the 52 percent of all small businesses that work from home,” said Kristie Arslan, president and CEO of the National Association for the Self-Employed.

“The previous calculation for the deduction was cumbersome and time-consuming for America’s smallest businesses, and year after year hard-earned dollars were off the table,” she said.

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